This is a great article to get you started if you find yourself in financial difficulty and want to help yourself get out of it.
There are many reasons why people may have problems with debt. Some of the more common reasons are loss of income due to illness, accident, or unemployment and problems with relationship break up. But there are steps you can take if you find yourself in this situation.
Prioritise your debts
While credit card debt and overdrafts can be more expensive debts, and you should keep repaying them if you can afford it, your priority should be keeping a roof over your head by making your monthly mortgage repayment and paying your utility bills.
Carefully consider any suggestion to switch from a favourable mortgage product such as a tracker
With recent interest rate decreases, you save money by keeping a tracker mortgage, because lenders are obliged to pass on interest rate changes to you.
Negotiate your options with your lender if you cannot keep up with repayments
See if your lender will consider other more manageable repayment options, such as payment breaks, increasing the term of your mortgage or interest only/lower payments for a time.
Try not to miss repayments – it will negatively affect your credit history
Missing payments on your loans or credit cards can have a negative impact on your credit history. Remember lenders will check this if you apply for a loan or mortgage in the future.
If you have motor or store finance, also known as a hire-purchase agreement, find out (before you agree to anything or hand back your car) what options you have for ending your agreement if you have to. You will want to make sure that any loan or agreement you terminate early minimises the costs to you and the effect on your credit rating.
Don’t end up with more expensive forms of credit
Borrowing more money to tide you over may not be the best option. However, it may help you manage the problem in the short term but only if you carefully manage it. Look at the cost of credit of any loan, before making a decision.
Our latest research into the financial capability of consumers in Ireland, shows that many of us are not taking the necessary steps to plan ahead, such as saving enough money for retirement, or putting money by for unexpected future expenses. Before you make any plans, you need a clear picture of your current situation, so start with a financial health check.
Then use a budget planner for ongoing planning. This will help you decide where you can make savings and put money aside for emergencies and rainy days. As a general rule, you should aim to have at least three months salary saved up, to tide you over if your income was to drop for any reason, or if an unexpected expense crops up. Use our money saving tips, which will help you build up a reserve.
Claim on your policies if you are entitled to
You may be in a position to claim on some protection policies you have taken out to cover you if you are made redundant, such as payment protection insurance or mortgage repayment protection insurance. Our information will help clarify if you might be eligible for a pay-out.
However, if you are having trouble making a claim, use our information about making an effective complaint. If you haven’t yet claimed, make sure you always keep your making your premium payments – otherwise, your policy will be cancelled.
Serious debt problems
If you are in serious debt, you can contact your local MABS (Money Advice and Budgeting Service) through their help-line on 1890 283 439. They offer free, confidential and independent advice to people in serious debt.
Taken from Its Your Money.ie
There are many reasons why people may have problems with debt. Some of the more common reasons are loss of income due to illness, accident, or unemployment and problems with relationship break up. But there are steps you can take if you find yourself in this situation.
Prioritise your debts
While credit card debt and overdrafts can be more expensive debts, and you should keep repaying them if you can afford it, your priority should be keeping a roof over your head by making your monthly mortgage repayment and paying your utility bills.
Carefully consider any suggestion to switch from a favourable mortgage product such as a tracker
With recent interest rate decreases, you save money by keeping a tracker mortgage, because lenders are obliged to pass on interest rate changes to you.
Negotiate your options with your lender if you cannot keep up with repayments
See if your lender will consider other more manageable repayment options, such as payment breaks, increasing the term of your mortgage or interest only/lower payments for a time.
Try not to miss repayments – it will negatively affect your credit history
Missing payments on your loans or credit cards can have a negative impact on your credit history. Remember lenders will check this if you apply for a loan or mortgage in the future.
If you have motor or store finance, also known as a hire-purchase agreement, find out (before you agree to anything or hand back your car) what options you have for ending your agreement if you have to. You will want to make sure that any loan or agreement you terminate early minimises the costs to you and the effect on your credit rating.
Don’t end up with more expensive forms of credit
Borrowing more money to tide you over may not be the best option. However, it may help you manage the problem in the short term but only if you carefully manage it. Look at the cost of credit of any loan, before making a decision.
- Beware of any surcharges and fees on unauthorised overdrafts and try to avoid these if at all possible.
- If you’re having trouble with your credit card debt – you may need to think about using a short-term personal loan, with a low annual percentage rate APR to clear your balance or switch to another card temporarily, with a 0% balance transfer until you can afford to pay it off.
- If you have a number of high-interest loans, you may find that it is cheaper to pay them off completely by taking out one low-rate loan, such as a good value personal loan or a top-up loan from your mortgage lender. Remember, a debt-consolidation loan could actually cost you more than your original loans if the term is too long.
Our latest research into the financial capability of consumers in Ireland, shows that many of us are not taking the necessary steps to plan ahead, such as saving enough money for retirement, or putting money by for unexpected future expenses. Before you make any plans, you need a clear picture of your current situation, so start with a financial health check.
Then use a budget planner for ongoing planning. This will help you decide where you can make savings and put money aside for emergencies and rainy days. As a general rule, you should aim to have at least three months salary saved up, to tide you over if your income was to drop for any reason, or if an unexpected expense crops up. Use our money saving tips, which will help you build up a reserve.
Claim on your policies if you are entitled to
You may be in a position to claim on some protection policies you have taken out to cover you if you are made redundant, such as payment protection insurance or mortgage repayment protection insurance. Our information will help clarify if you might be eligible for a pay-out.
However, if you are having trouble making a claim, use our information about making an effective complaint. If you haven’t yet claimed, make sure you always keep your making your premium payments – otherwise, your policy will be cancelled.
Serious debt problems
If you are in serious debt, you can contact your local MABS (Money Advice and Budgeting Service) through their help-line on 1890 283 439. They offer free, confidential and independent advice to people in serious debt.
Taken from Its Your Money.ie